The $1.9 trillion American Rescue Plan Act (ARPA) of 2021 (P.L. 117-2) was signed into law on March 11, 2021. Known as ARPA, the wide-ranging law contains many tax-relief measures for businesses, with varying effective dates.

Tax Treatment of Financial Assistance Programs

ARPA provides funding for a variety of already-enacted programs offering loans, grants, and other assistance to businesses impacted by COVID-19. The new law effectively extends the Consolidated Appropriations Act of 2021 (CAA), enacted in December 2020, which made it clear that certain types of loan forgiveness will be nontaxable. This favorable tax treatment extends to:

  • The Paycheck Protection Program (PPP)
  • The SBA’s Economic Injury Disaster Loan (EIDL) advances up to $10,000
  • Funding under the Shuttered Venue Operator Grant (SVOG) program for operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, and talent representatives are nontaxable while expenses are tax deductible to the extent otherwise allowed. The new law applies similar treatment to: